A major monoline lender has re-entered the commercial mortgage backed securities (CMBS) market, a decision made, in large part, due to investor demand.
First Financial Corporation once again started providing CMBS this month, contributing $105 million to a $283.7 million CMBS pool. The figure includes commercial real estate mortgages originated by First National with 10-year terms on properties across Canada.
"Our decision to again contribute commercial mortgages to CMBS pools was driven by resurgent investor demand which had been dormant for several years following the global financial crisis," said Moray Tawse, executive vice president of First National. "What we see now is a strong appetite for good commercial product, which we are uniquely positioned to serve as a leader in the sector."
It’s the first time since 2007 the lender has provided CMBS. Its goal is to provide investors with access to pools of Canadian commercial mortgages.
"First National has what it takes to be a leader in the CMBS market," said Jeremy Wedgbury, senior vice president of commercial mortgages. "We have a strong national distribution network with a dedicated team of mortgage origination professionals in Canada's major cities, many long-standing relationships and access to high-quality borrowers. Given our long history of performance - including steady originations, high renewals and low defaults - in a Canadian commercial real estate market that is broadly recognized for its investment-grade characteristics, we are able to meet the risk-return objectives of CMBS investors."
From 2003-2007, First National participated in 12 CMBS transactions, including 189 loans that totaled more than $1 billion. No losses were incurred on any of the mortgage pools.
"We are pleased to act as a conduit to a market that was once a significant source of commercial mortgage funding and can be again," Tawse said. "CMBS has proven to address the competitive funding needs of our borrowers and the demands of investors who value access to a diversified portfolio of well-selected, well-managed commercial mortgages producing solid and stable cash flow."